We came across a bearish thesis on Calumet, Inc. (CLMT) on X(Twitter) by @puppyeh1. In this article, we will summarize the bears’ thesis on CLMT. Calumet, Inc. (CLMT)’s share was trading at $14.40 as of 29th May. CLMT’s trailing and forward P/E were 23.06 and 11.35, respectively, according to Yahoo Finance.
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Calumet Specialty Products ($CLMT) is currently facing significant financial strain, with concerns centered around its highly leveraged capital structure and the increasing likelihood of covenant breaches and refinancing difficulties. As of December 2024, the company was approximately 8x net levered, a level considered unsustainable, especially following further negative developments in early 2025.
The company has major debt obligations coming due, including $355 million in unsecured notes maturing in October 2026 and $325 million in January 2027. These maturities begin to appear current within the next 12–18 months, increasing refinancing pressure. Additionally, the firm has an asset-based loan (ABL) facility tied to a borrowing base consisting primarily of receivables, inventory, and cash—valued at $450 million at year-end 2024. Given the 20% decline in oil prices since then, the borrowing base may now be closer to $390 million, reducing excess availability and likely triggering a springing covenant that requires a fixed charge coverage ratio (FCCR) above 1x.
Current EBITDA estimates ($195 million) versus high interest expense ($237 million) and capital expenditures (~$77 million) suggest that the company’s FCCR is well below 1x, increasing the risk of a covenant breach. Even with $110 million in proceeds from an asset sale and $188 million in Department of Energy loan funds upstreamed to the parent, Calumet may still face a $200 million shortfall in late 2025. Combined refinancing needs of around $500 million by early 2026 raise substantial solvency concerns, casting a bearish outlook on the stock.
Calumet, Inc. (CLMT) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held CLMT at the end of the fourth quarter which was 21 in the previous quarter. While we acknowledge the potential of CLMT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.